Correlation Between Colgate Palmolive and John B

Can any of the company-specific risk be diversified away by investing in both Colgate Palmolive and John B at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Colgate Palmolive and John B into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Colgate Palmolive and John B Sanfilippo, you can compare the effects of market volatilities on Colgate Palmolive and John B and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Colgate Palmolive with a short position of John B. Check out your portfolio center. Please also check ongoing floating volatility patterns of Colgate Palmolive and John B.

Diversification Opportunities for Colgate Palmolive and John B

-0.13

Correlation Coefficient

Colgate Palmolive  John B

Good diversification

The 3 months correlation between Colgate and John is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Colgate Palmolive and John B Sanfilippo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John B Sanfilippo and Colgate Palmolive is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Colgate Palmolive are associated (or correlated) with John B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John B Sanfilippo has no effect on the direction of Colgate Palmolive i.e., Colgate Palmolive and John B go up and down completely randomly.

Pair Corralation between Colgate Palmolive and John B

Allowing for the 90-day total investment horizon Colgate Palmolive is expected to generate 0.74 times more return on investment than John B. However, Colgate Palmolive is 1.34 times less risky than John B. It trades about 0.04 of its potential returns per unit of risk. John B Sanfilippo is currently generating about -0.15 per unit of risk. If you would invest  9,028  in Colgate Palmolive on December 28, 2024 and sell it today you would earn a total of  291.00  from holding Colgate Palmolive or generate 3.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Colgate Palmolive  vs.  John B Sanfilippo

Colgate Palmolive

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Colgate Palmolive are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Colgate Palmolive is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

John B Sanfilippo

Risk-Adjusted Performance

Very Weak

Over the last 90 days John B Sanfilippo has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Colgate Palmolive and John B

The main advantage of trading using opposite Colgate Palmolive and John B positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Colgate Palmolive position performs unexpectedly, John B can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in John B will offset losses from the drop in John B's long position.

The idea behind Colgate Palmolive and John B Sanfilippo pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.